Tag Archives: paul graham

I am having a great time listening to lectures for Stanford CS183B – How to start a startup online. All lectures have been extremely good, and it allowed me to get a sense of how Y Combinator accepted companies into its batches and what made them successful. I am learning so many things, and I see some common underlying themes I want to write about, but two lectures really struck a chord with me.

Before the Startup by Paul Graham and Business Strategy and Monopoly Theory by Peter Thiel, in my opinion, were dead on. Many startups were able to thrive on because many of their ideas seemed bad at the time. If you have an obviously good idea, then many people will go for the same idea. That leads to competitions. For consumers, competition is good, but for business not so. And in a sense, overarching goal of a business is to become a monopoly in its market.

In Crossing the Chasm, the author, Geoffrey Moore, argues that in order for disruptive technology company to survive, it needs to reach beyond technology pioneers and early adapters and move to early majority market. The gap between them is so great that many technology companies fail, and he named it “chasm”. What’s the strategy for crossing the chasm successfully? He coined the first market segment in early majority “beach-head market”. This is where company has to put all its resources and try to conquer. Company can get it wrong, of course, and it’s imperative that company finds this sooner than later so that it can correct its course, and hopefully new one is the right one.

One thing he emphasizes in conquering the beach-head market is to be the market leader. Who is market leader? I believe it’s synonymous to monopoly. You need to have at least 60% of the market share in the segment. Market leader has several advantages over #2 and #3 in the market. Because of its reach in the market, there will be auxiliary companies supporting the market leader, thus creating the whole eco-system. Often times, cost of changing product from leader to another is so great that it gives the leader leeway with its customers. After taking the leadership, it can expand to adjacent markets with money and time it earned being the market leader of beach-head market (he compared to going to adjacent markets as using the top pin in bowling to knock down other pins). If I remember correctly, Geoffrey Moore suggested the beach-head market be adequate enough for a startup to tackle.

Similarly, in Innovator’s Dilemma, the author, Clayton Christensen provides examples after examples, time and time again, a startup seems to come out of nowhere and take over the 900-lbs. gorilla of the market. What’s interesting is that companies in Clayton’s examples represent diverse markets – consumer, enterprise, and even to steel mills. They all had a few things in common.

They all started by attacking the market segment with much lower margin so market leader is happy to let them take it. Market leader is usually larger in size, and thus require much higher margin to operate and make profits. While market leader grows nominally by producing products for handful of larger customers, startup becomes leader in its segment and advances its products at faster rate. When the market leader notices startups’ progress, it’s often too late and even its larger customers are ready to become startup’s customers.

Those two books definitely shaped my views of startups, and Paul and Peter’s lectures seem to validate the books’ main points. There are, of course, many other things that contribute to a startup’s success or failure – co-founder dynamics, team, culture, executions, and any external events. However, I believe, one thing is sure to attribute to startup’s success.

It could be that it’s a market segment on one cares or that the idea you are working on seems to be bad to everyone else. Whatever it is, startup needs to become a leader in market segment to survive and succeed.

What hackers and painters have in common is that they’re both makers. Along with composers, architects, and writers, what hackers and painters are trying to do is make good things. They’re not doing research per se, though if in the course of trying to make good things they discover some new technique, so much the better.

Over the course of my career, I have realized that I really enjoy building and tinkering with things. I should have realized this much earlier, but my desire to go back to programming and actually enjoying building web applications made me realize it. Ever since I was young, I really enjoyed building different things like AM/FM radio from a kit, model airplane, propeller-rubber airplane, etc. I think that’s why I also enjoyed being a product manager, building a product someone actually finds useful. I think one of the highlights of my career was when we delivered a product as promised and more on time, the customer was actually surprised. It’s so prevalent in high tech industry for a product to be shipped late, being on time is a surprise.

I also have a sort of utilitarian approach to life, where I hate extra things that just get in the way of achieving a goal such as stupid, bureaucratic processes big companies put in place. This is why I love open source. If I need to get something done, the chances are I can find a tool to do it in open source. Like at my previous company, which was quite small, when we wanted a way to communicate with everyone and also have repository of information such as customer requirements and feedback, I just installed Drupal CMS on a unused PC and configured in a day or two. It actually came about because I wanted a simpler way of sharing training video with everyone. I certainly didn’t want to put it on share drive and have people download the huge file so that they could watch it. The best way was streaming, even internally, and converting to and uploading a flash version of the file on to Drupal seemed to be a good answer at the time. And we just started using it for internal communications portal. It is unthinkable at a company like Samsung or AT&T (I used to work at both companies).

My definition of hacking is not hacking in Hollywood‘s or security term, but just making things work and getting things done. I tell people I hack codes. I look at examples, see how they work, and make my own changes to fit my own needs. This is again why open source is so beautiful. I am not at the point of being able to contribute to open source world, but I hope I can some day. Internet is a wonderful place for hackers (this time it means for both my kind of hackers and also Hollywood’s hackers). My definition of hacking also aligns with utilitarian approach. Taken to extreme, it could mean that you can whatever you can, ethical or unethical, to reach a goal. But, I think majority of people including me have good sense of morals that prevent them from hurting or stealing from others. I think and I hope.

At any rate, I feel like I am going back to my root by hacking and building web applications that I think would be useful, not just to me but hopefully to many others, too.